The distribution of income in Uruguay: the effects of economic and institutional reforms

This paper is concerned with distributive aspects of crucial economic and institutional reforms experienced by income sources in Uruguay after the late eighties. These reforms involved both, the labor market and the pensions system, and we provide empirical evidence about the different way they affected thedistribution of income. The distribution of income across all earners at the end of the eighties exhibited two well-distinguished poles, each associated with one income source. This bimodality faded with time during the nineties due to the general improvement in retirement pensions, vanishing polarization by income sources. For the same period we find in the case of labor earnings a net transfer of population mass from the middle of the distribution to both extremes, which results in increasing polarization within this income source.